# PEG Ratio Calculator

URL: https://speedycalculator.com/calculators/finance/peg-ratio/
Last updated: 2026-10-25

> The PEG ratio calculator divides a stock's price-to-earnings ratio by its expected earnings growth rate – estimated directly or from ROE and the retention rate – to judge whether its valuation is justified by growth.

## Inputs

- Price per share
- Earnings per share
- Growth estimate
- Expected annual EPS growth (%)
- Return on equity (%)
- Retention rate (%)

## Results

- P/E ratio
- Earnings growth used
- PEG ratio
- Rule of thumb

## Formula

```
P/E = price ÷ EPS
Growth = expected EPS growth, or ROE × retention rate
PEG = P/E ÷ growth rate (%)
```

## Explanation

Popularised by Peter Lynch, the PEG ratio adjusts the P/E for growth: a PEG of 1 suggests a fairly valued growth stock, below 1 potentially undervalued, above 2 expensive. It depends heavily on the growth estimate.

### How to use the PEG Ratio Calculator

- **Price per share**
- **Earnings per share**
- **Growth estimate**
- **Expected annual EPS growth**
- **Return on equity**
- **Retention rate**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the share price and EPS (or the P/E), and the expected growth rate or ROE and retention rate.

### Tips

- Take figures from the same financial statements and the same fiscal year.
- Compare ratios with companies in the same industry, not across industries.
- Use several valuation measures together; no single ratio tells the whole story.
- Market prices change every second – refresh the share price before you rely on a result.

### Common mistakes to avoid

- Mixing per-share figures with company totals.
- Using trailing earnings for one company and forward earnings for another.
- Forgetting dilution from options and convertible securities.

### Inputs explained

FieldWhat to enterPrice per shareAmount in your currencyEarnings per shareAmount in your currencyGrowth estimateChoose one: Enter expected EPS growth, Calculate from ROE × retentionExpected annual EPS growthIn %Return on equityIn %Retention rateIn %

### What each result means

- **P/E ratio** = [Price per share]÷[Earnings per share]
- **PEG ratio** = [P÷E ratio]÷[Earnings growth used]

### Example values

How the main result changes when **Price per share** changes and everything else stays at the example values above:

Price per sharePEG ratio450.6767.51901.33112.51.6713521802.67

## Worked example

Inputs — Price per share: $90; Earnings per share: $4.5; Growth estimate: Enter expected EPS growth; Expected annual EPS growth: 15 %; Return on equity: 18 %; Retention rate: 70 %.

Results — P/E ratio = 20; Earnings growth used = 15 %; **PEG ratio = 1.33**; Rule of thumb = Fairly valued (1–2).

## FAQ

**What is a good PEG ratio?**
Below 1 is often considered attractive.

**Which growth rate should I use?**
The expected annual EPS growth over the next 3–5 years.

**What are the PEG ratio's weaknesses?**
It relies on uncertain growth forecasts and ignores dividends.

**What formula does the PEG Ratio Calculator use?**
P/E = price ÷ EPS.